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A lady brought me her tax info at the very end of the season. Her husband had always prepared their taxes but like no few others has now become unable to do so. She knew almost nothing about the taxes. After getting together most of the info it looked to me they would receive a refund so I saw no need to file an extension but was lacking one item which took some time to get. I thought it would not change their getting a refund. Lo and behold after working the new info in they owe tax. I'll get this back to them on Monday and as they have a good record I am wondering if I could get them a one time waiver of the late filing penalty. I cannot recall the last time I applied for this waiver and would appreciate any info on the needed form I will need to file. In fact I am uncertain whether a waiver is granted for a late filed return.


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Late filing penalty isn't one that is covered by the first-time penalty abatement, and I'm not sure you'll qualify for the abatement of the late payment penalty either since you didn't get an extension, but you can try.  The worst that can happen is the IRS will deny the request.  I think you do have to wait for the notice of assessment though, nothing to do at filing. 

If you do try this, I'd include the facts about wife's first year handling this, and although they owe because of the last missing piece, that you made a good faith effort at calcuting the tax and the resulting anticipated refund situation (that failed to materialize) that lead to not obtaining an extension. 

Below is the IRS page for penalty abatement and one from the AICPA that may be helpful:



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I am always saving and stuffing the information I receive from this forum. You can be sure I too will always be extending in future although I think I will be able to get any penalty excused. I simply thought the couple would get a refund based on what I had and the size of the refund I was looking at. I should have known better. My bad. 😖

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These are the penalties that can be abated-

Penalties eligible for penalty relief include:

Failing to file a tax return   (this is the late filing penalty)

Failing to pay on time

Failing to deposit certain taxes as required

Other penalties as applicable.

I've had to do this 3 times and the best and fastest way is to call PPL and they will check the taxpayers record looking back 3 years.  If there are no penalties from those years, it will normally be granted, but even a small late payment penalty could sink it.  If it is denied, it can be appealed.  You will get a letter of denial and where to send the appeal.   The reasonable clause standard is pretty hard to meet.  Unless, one of the spouses died or became incapacitated, their house burned down, or the records got swept away in tornado, there is little chance.  There is a fourth standard, but it only applies to businesses and it is one of those nebulous things that could be hard to prove.

BTW, you don't need to file form 4868 to get an extension - IF the client makes an Electronic estimated tax payment in time for the extension.  It's right in the instructions in the 1st paragraph on the upper right.




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